M/s. JASANI (FORMERLY RATHILAL BECHARLAL & SONS), MUMBAI V. ACIT - 16(3), MUMBAI

ITA 4487/MUM/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9987 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 13-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHAMMED RIZWAN ADD
• Keywords: Depreciation; Transfer pricing; International transaction; Reasonable cause
• Section: 271(1)(c); 143(3); 201; 274

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI PAWAN SINGH (JM) & SHRI RIFAUR RAHMAN ITA NO. 4487/MUM/2018 (ASSESSMENT YEAR : 2007-08) JASANI (FORMERLY RATILAL BECHARLAL & SONS) HW 6010, TOWER H, 6 TH FLOOR, BHARAT DIAMOND BOURSE, BANDRA KURLA COMPLEX, BANDRA (EAST) MUMBAI-400002 PAN : AAAFR7913B VS ACIT -16(3) ROOM NO. 206, 2 ND FLOOR, MATRU MANDIR, MUMBAI-400007 APPELLANT RESPONDEDNT APPELLANT BY SHRI APURVA SHAH AR RESPONDENT BY SHRI MOHAMMED RIZWAN ADD. CIT (SR DR) DATE OF HEARING 09 - 12 - 201 9 DATE OF PRONOUNCEMENT 09-12-2019 O R D E R PER PAWAN SINGH, JM : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) {CIT(A)}-29, M UMBAI DATED 13- 04-2018, WHICH IN TURN ARISES FROM PENALTY ORDER PA SSED U/S 271(1)(C) FOR ASSESSMENT YEAR 2007-08. THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS OF APPEAL:- THE COMMISSIONER OF INCOME TAX (APPEALS) - 29, MUM BAI ERRED: 1. IN CONFIRMING LEVY OF PENALTY OF RS. 8,883/- U /S 271 (1) ( C) OF THE INCOME TAX ACT,1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF EXPORT / IMPORT OF MANUFACTURING OF DIA MONDS, FILED ITS RETURN 2 ITA NO.4487 /MUM/2018 M/S. JASANI (FORMERLY RATILAL BECHARLAL & SONS) OF INCOME FOR AY 2007-08 DECLARING TOTAL INCOME OF RS.14.67 CRORES. THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSEE R EPORTED INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATED ENTERPRISES (AE). ACCORDINGLY, REFERENCE WAS MADE TO TRANSFER PRICING OFFICER (TPO) FOR COMP UTATION FOR ARMS LENGTH PRICE (ALP) WITH REGARD TO THE INTERNATIONAL TRANSACTION. CONSEQUENT UPON DETERMINATION OF ALP, THE ASSESSING OFFICER (AO) PASSED DRAFT ASSESSMENT ORDER, WHEREIN THE AO, BESI DES OTHER ADDITIONS / DISALLOWANCES, DISALLOWED DEPRICIATION ON LAPTOP. THE AO WHILE MAKING DISALLOWANCE NOTED THAT ASSESSEE COULD NOT PRODUCE INVOICE / BILL AND ACCORDINGLY DEPRECIATION OF RS. 29,609/- WAS DISALL OWED. ON OBJECTION BEFORE THE DISPUTE RESOLUTION PENAL (DRP), THE DISA LLOWANCE WAS UPHELD. ACCORDINGLY, FINALLY DISALLOWANCE ON DEPRE CIATION WAS MADE IN ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 144C. ON FURTHER APPEAL BEFORE TRIBUNAL, THE ADDITIONS// DISALLOWANCES ON D EPRICIATION WAS UPHELD. 3. THE AO ISSUED SHOW CAUSE NOTICE U/S 274 R.W.S. 271( 1)(C) DATED 21-10- 2011 AND AGAIN ON 23-08-2013. THE ASSESSEE FILED IT S REPLY, WHEREIN THE ASSESSEE PRAYED FOR DROPPING THE PENALTY PROCEEDING S. THE REPLY FURNISHED BY THE ASSESSEE WAS NOT ACCEPTED BY THE A O. THE AO NOTED THAT DISALLOWANCE OF DEPRECIATION FOR RS.29,609/- W AS MADE IN ASSESSMENT ORDER ON WHICH MINIMUM PENALTY @100% OF TAX SOUGHT TO BE 3 ITA NO.4487 /MUM/2018 M/S. JASANI (FORMERLY RATILAL BECHARLAL & SONS) EVADED IS RS.8,883/-; HENCE, THE AO LEVIED PENALTY OF RS.8,883/- IN HIS ORDER DATED 30-03-2013. ON FURTHER APPEAL BEFORE C IT(A), THE ACTION OF AO LEVYING PENALTY WAS CONFIRMED. THUS, FURTHER AG GRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED PRESENT APPEA L BEFORE TRIBUNAL. 4. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORISED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (D R) FOR REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE SUBMITS THAT ASSESSEE IS A TAXPAYER IN HIGHER TAX B RACKET AND OFFERED A TAXABLE INCOME OF RS.14.67 CRORES. DURING THE ASSE SSMENT THE ASSESSEE COULD NOT PRODUCE THE INVOICE FOR PURCHASE OF LAPTO P OF RS.98,696/-. COST OF PURCHASE WAS ADDED IN THE SCHEDULE OF FIXED ASSETS. THE ASSESSEE CLAIMED DEPRECIATION ON SUCH LAPTOP. HOWEVER, THE DEPRECIATION OF RS.29,609/- WAS DISALLOWED IN ABSENCE OF EVIDENCE O F PURCHASES. THE AO HAS NOT DOUBTED THE USE OF LAPTOP FOR THE PURPOS E OF BUSINESS. THE LD.AR FOR ASSESSEE FAIRLY SUBMITS THAT ON OBJECTIO N BEFORE DRP AND ON FURTHER APPEAL BEFORE TRIBUNAL, THE ASSESSEE WAS NO T GRANTED RELIEF ON SUCH DEPRECIATION. THE LD. AR FOR ASSESSEE SUBMITS THAT MERE DISALLOWANCE WOULD NOT LEAD TO FURNISHING OF INACCU RATE PARTICULARS WHEN USE OF LAPTOP FOR THE PURPOSE OF BUSINESS IS NOT DI SPUTED BY AO. THE LD.AR FOR THE ASSESSEE FURTHER SUBMITS THAT THE DIS ALLOWANCE WAS MADE FOR THE REASONS THAT ASSESSEE WAS UNABLE TO PRODUCE THE RECEIPT / PURCHASE 4 ITA NO.4487 /MUM/2018 M/S. JASANI (FORMERLY RATILAL BECHARLAL & SONS) INVOICE OF LAPTOP. THE LD.AR FOR THE ASSESSEE SUBM ITS THAT IN THE REPLY TO SHOW CAUSE NOTICE UNDER SECTION 274 RWS 271(1) ( C), THE ASSESSEE HAS SHOWN REASONABLE CAUSE IN ITS REPLY DATED 28-08-201 3. THE LD.AR FOR THE ASSESSEE FINALLY SUBMITS THAT THE ASSESSEE COUL D NOT PRODUCE THE RECEIPT DUE TO BONA FIDE REASONS AND OTHERWISE, THE ASSESSEE HAD NO OCCASION TO FURNISH INACCURATE PARTICULARS AS THE A SSESSEE HAS SHOWN A TAXABLE INCOME OF ABOUT RS.15 CRORES. THE LD.AR PR AYED FOR DELETION OF ENTIRE PENALTY U/S 271(1)(C). 5. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE RELIE D UPON THE ORDERS OF LOWER AUTHORITIES. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH TH E PARTIES AND HAVE GONE THROUGH THE RECORD OF CASE. WE HAVE CAREFULL Y PERUSED THE ASSESSMENT ORDER, PENALTY ORDER AND ORDER OF LD CIT (A). THE AO DURING THE ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE IN THE BLOCK OF ASSETS HAS ADDED THE COST OF LAPTOP. THE ASSESSEE WAS ASK ED TO FURNISH INVOICE OF PURCHASE OF LAPTOP. THE ASSESSEE FILED CREDIT C ARD STATEMENT SHOWING THE PAYMENT OF THE PURCHASE. THE AO NOTED THAT THE PAYMENT WAS MADE BY THE PARTNER OF THE ASSESSEE FIRM. THE AO FURTHE R NOTED THAT THE ASSESSEE COULD NOT FILE ANY EVIDENCE THAT PAYMENT W AS MADE FOR THE PURCHASE OF LAPTOP. THE AO BY TAKING VIEW THAT ASS ESSEE COULD NOT FILE EVIDENCE FOR ACQUISITION OF LAPTOP. ACCORDINGLY DE PRECIATION OF 5 ITA NO.4487 /MUM/2018 M/S. JASANI (FORMERLY RATILAL BECHARLAL & SONS) RS.29,609/- WAS DISALLOWED IN THE DRAFT ASSESSMENT ORDER. THE OBJECTION RAISED BY ASSESSEE BEFORE DRP, WITH REGARD TO DISAL LOWANCES OF DEPRICIATION, WAS REJECTED. ON DEPRECIATION AMOUNT OF RS.29,609/-, THE AO LEVIED PENALTY U/S 271(1)(C) BEING 100% OF TAX S OUGHT TO BE EVADED. THE FURTHER APPEAL THE LD. CIT(A) CONFIRMED THE ACT ION OF AO BY REFERRING THE INGREDIENTS OF EXPLANATION 1 TO SECTI ON 271(1)(C). IN OUR VIEW, THE EXPLANATION 1 DEALS WITH THE DEEMED CONCE ALMENT. THE AO LEVIED PENALTY FOR FURNISHING INACCURATE PARTICULAR S; HOWEVER, THE LD. CIT(A) WHILE CONFIRMING THE PENALTY AT PARA 3.3.10 REFERRED THE INGREDIENTS OF EXPLANATION 1 TO SECTION 271(1)(C), WHICH DEALS WITH DEEMED CONCEALMENT. WE HAVE ALSO NOTED THAT THE US E OF LAPTOP FOR THE PURPOSE OF BUSINESS IS NOT DISPUTED. THE AO BEFORE MAKING DISALLOWANCE HAS NOT VERIFIED THE CREDIT CARD STATE MENT. IN OUR VIEW, THE DISALLOWANCE WAS MADE IN ABSENCE OF PURCHASE BILL/ INVOICE ONLY. IN FACT, THE PURCHASE IS NOT IN DISPUTE. IN OUR VIEW THE PARTICULARS FURNISHED BY ASSESSEE WAS NOT INACCURATE BUT COULD NOT BE SUB STANTIATED FOR WANT OF DOCUMENTARY EVIDENCE. THEREFORE, IN OUR VIEW IT WA S NOT FIT CASE FOR LEVYING PENALTY NEITHER FOR FURNISHING INACCURATE P ARTICULARS OF INCOME OR FOR TREATING IT AS A CONCEALMENT OF INCOME. HENCE, WE DIRECT THE AO TO DELETE THE ENTIRE PENALTY. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 6 ITA NO.4487 /MUM/2018 M/S. JASANI (FORMERLY RATILAL BECHARLAL & SONS) ORDER PRONOUNCED IN THE OPEN COURT ON 09TH DECEMBER 2019, WHILE HEARING THE APPEAL. SD/- SD/- (RIFAUR RAHMAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 9 TH DECEMBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI